Amicus Curiae Brief — Atkinson Trading Co. v. Shirley

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No. 00-454 OCT 23 2000 CO

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In The CLERK

Supreme Court of the United States =

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ATKINSON TRADING COMPANY, INC.,

Petitioner,

V.

JOE SHIRLEY, JR., VICTOR JOE, DERRICK B.

WATCHMAN, and ELROY DRAKE, MEMBERS of the

NAVAJO TAX COMMISSION; and STEVEN C. BEGAY,

Executive Director of the Navajo Tax Commission,

Respondents.

*

On Petition For Writ Of Certiorari ~

To The United States Court Of Appeals

For The Tenth Circuit

e

BRIEF OF AMICUS CURIAE

STATES OF SOUTH DAKOTA, ALABAMA,

COLORADO, FLORIDA, MICHIGAN, MISSISSIPPI,

MONTANA, UTAH AND WYOMING

IN SUPPORT OF PETITIONER

¢

Mark W. BARNETT

Attorney General

State of South Dakota

JOHN Patrick GUHIN*

Deputy Attorney General

500 East Capitol Avenue

Pierre, South Dakota 57501-5070

Telephone: (605) 773-3215

*Counsel of Record

{Additional counsel listed on inside cover]

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

Bit Pryor

Alabama Attorney General

State House

11 South Union Street

Montgomery, Alabama 36130

KEN SALAZAR

Colorado Attorney General

1525 Sherman Street, 7th Floor

Denver, Colorado 80203

Rosert A. BUTTERWORTH

Florida Attorney General

The Capitol PL-01

Tallahassee, Florida 32399

JENNIFER M. GRANHOLM

Michigan Attorney General

P.O. Box 30212

Lansing, Michigan 48909

Mike Moore

Mississippi Attorney General

P.O. Box 220

Jackson, Mississippi 39205

JosepH P. MazurReEk

Montana Attorney General

215 N. Sanders

Helena, Montana 59620

JAN GRAHAM

Utah Attorney General

236 State Capitol

Salt Lake City, Utah 84114

Gay WoopDHOUSE

Wyoming Attorney General

123 Capitol Building

Cheyenne, Wyoming 82002

TABLE OF CONTENTS

Page

pe FR Bs oe irs. 8 a! .. er er errr rey er ii

ty 3) am ye Ra eer aera Sr rere ere 1

Ec eee GE ADEPT CURIAD 6 on ci cnc cswsascvces 1

ES 4 et oe! 8)”. ) ee rae 2

PS ere ye reer eee ee eer ee 4

I. THE COURT BELOW FAILED TO APPLY THE

STANDARDS ESTABLISHED BY THIS COURT

IN STRATE AND MONTANA REGARDING

THE APPLICATION OF TRIBAL CIVIL JURIS-

DICTION OVER NONMEMBERS FOUND ON

NONTRIBAL LAND IN RESERVATIONS ...... 4

II. THE DECISION BELOW HAS THE POTENTIAL

TO SERIOUSLY DISRUPT APPLICATION OF

MONTANA PRINCIPLES OUTSIDE THE TAXA-

pi 8 Re ts 6 EO ae ene ee eee re we ae 10

III. CERTIORARI SHOULD BE GRANTED TO

RESOLVE THE DIRECT CONFLICT WITH THE

SE EEE COORG a KAS h cS aM wh dnwee Na 56 eek 12

ew Ee re Tee ee eT Pe Tere rT ere ee 13

il

TABLE OF AUTHORITIES

Page

CASES

Big Horn Electric Cooperative v. Adams, 219 F.3d 944

(Str Cie, 2000)... cs. e cc ckesevennsscsemeweauenmes 12

Bugenig v. Hoopa Valley Tribe, No. 99-15654, 2000

U.S. App LEXIS 24746 (9th Cir. Oct. 3, po 11

Carmichael v. Southern Coal & Coke Co., 301 U.S. 495

ty ne erirw err ort Go 8

Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163

(RODD) onc n ck ccccccnscysnueus (e500kegee eee ees 12

El Paso Nat. Gas Co. v. Neztsosie, 526 U.S. 473

(TOD) on ccccessiscnncenees eee aeah eee 5

Hagen v. Utah, 510 US. S00 CORE oes a aeice aes 11

Lincoln v. Vigil, 508 U.S. 182 (1993).......-----+--+5- 12

Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982) .... 12

Montana v. United States, 450 U.S. 544 (1981) .... passim

Negonsott v. Samuels, 507 U.S. 99 (1993) .....--+-++-- 12

Oklahoma Tax Comm'n v. Chickasaw Nation, 515 U.S.

S50 (1998)... . kes siss Gases Pre 11

Oklahoma Tax Comm'n v. Citizen Band Potawatomi

Indian Tribe, 498 U.S. 505 (1991). .........cceeeeees 12

Oklahoma Tax Comm'n v. Sac and Fox Nation, 508

US. 114 (1998) 0. 00 isckccussssivenneees eee in

South Dakota v. Bourland, 508 U.S. 679 (1993) ......... 4

Strate v. A-1 Contractors, 520 U.S. 438 (1997)..... passim

“Washington v. Confederated Tribes of Colville Indian

Reservation, 447 U.S. 134 (1960) «0.50. cccsascnsvuees 12

ili

TABLE OF AUTHORITIES - Continued

Page

STATUTORY REFERENCES

Mont. Code Ann § 18-11-103(1)(b)(1999)...........--. 1

S.D. Codified Laws Ann. §§ 10-12A-1 et seq.......... 1

OTHER REFERENCES

SE a ee ee ee 1

INTRODUCTION

The States of South Dakota, Alabama, Colorado, Flor-

ida, Michigan, Mississippi, Montana, Utah and Wyoming

through their respective Attorneys General, respectfuliy

submit a brief Amicus Curiae pursuant to S. Ct. R. 37.2 in

support of the Petition for Writ of Certiorari.

4

INTEREST OF AMICI CURIAE

Each State appearing as an amicus curiae contains

one or more Indian reservations created under federal

law. As a result of subsequent federal legislation, how-

ever, substantial amounts of reservation land are now

owned in fee by nonmembers and by the federal, state,

and local governments.

Each amicus State shares an interest in being able to

predict, with some measure of certainty, the scope of

tribal taxation authority. Not only will this knowledge aid

in the avoidance of conflict, but it will allow the States to

fashion their own policies to integrate state and tribal

taxation authority in ways beneficial to both. See, ¢.g.,

SD. Codified Laws Ann. §§ 10-12A-1 et seq. (allowing

agreements between state and tribes to collect tribal

taxes); Mont. Code Ann § 18-11-103(1)(b) (1999) (authori-

zing public agency to enter into state-tribal agreements).

Each State also faces the even more daunting task of

determining the legal and appropriate extent of tribal

jurisdiction generally with regard to non-Indians on res-

ervations and the decision below undermines the finely

tuned rules developed by this Court.

e

SUMMARY OF ARGUMENT

In Strate v. A-1 Contractors, 520 U.S. 438 (1997), and

Montana v. United States, 450 U.S. 544 (1981), this Court

established a bright-line rule with regard to the issue of

whether a tribe could exercise civil regulatory authority

over nonmembers on nontribal land within a reservation.

The cases set out a “main rule” that absent contrary

congressional direction, a tribe lacks civil authority over

the conduct of nonmembers on land within a reservation

to which the tribe has lost “gatekeeping” power. The

Court has identified two exceptions to the main rule: A

tribe may have civil regulatory jurisdiction over a non-

member on fee land who enters into consensual relation-

ships with a tribe or its members or who engages in

activity directly affecting the tribe’s political integrity,

economic security, health, or welfare. Strate and Montana

thus establish a strong presumption against civil tribal

authority with regard to nonmembers on non-Indian land

within the reservation; the presumption can, however, be

_ overcome by proof of one of the two exceptions.

The rule carefully drawn in Strate and Montana is

radically undermined by the decision below. The court of

appeals flatly rejected the thesis that the nontribal status

of land was a critical lynchpin of Montana and Strate,

characterizing such status as a mere “coincidence” Pet.

App. 15a-16a or “simply one factor”, id. at 16a, to be

considered in determining the existence of inherent tribal

authority. Moreover, in place of the carefully wrought test

developed by this Court, the Tenth Circuit adopted a

“balancing test” relating to the status and conduct of the

nonmembers, the “nature” of the sovereign powers at

issue and the impact of the nonmember conduct on the

tribe’s power. The accounting of land status either falls

within this test “or becomes secondary,” according to the

Tenth Circuit. Id. at 25a.

The decision below, moreover, aggravated its misin-

terpretation of Montana by adopting an extremely broad

theory of implied consent to tribal jurisdiction. Under the

Tenth Circuit’s opinion, a nonmember impliedly con-

sented to tribal civil jurisdiction merely by entering onto

a reservation by way of a state highway for the purpose

of spending a night at a non-Indian hotel on non-Indian

land. Id. at 26a-30a. The Tenth Circuit further found that

the tax in question could be applied because it was not

“disproportionate” to the benefits received by the non-

Indian. Id. at 30a-32a. In practical effect, the court of

appeals’ decision elevates the first, or consent, exception

in Montana to controlling significance and, in practical

effect, replaces the main rule’s presumption against tribal

authority with one in favor of such authority unless the

particular regulation is deemed “disproportionate.”

Certiorari review is thus essential to ensure that the

doctrinal coherence of Montana’s “pathmarking” analysis

is maintained. Absence of immediate review, we believe,

will serve only to foment jurisdictional controversy over

the full range of civil inherent authority in Indian country

within the Tenth Circuit and beyond — conflict that can be

avoided by disabusing the court below of its errant recon-

figuration of Montana’s main rule and the consent excep-

tion.

ARGUMENT

I

THE COURT BELOW FAILED TO APPLY THE STAN-

DARDS ESTABLISHED BY THIS COURT IN STRATE

AND MONTANA REGARDING THE APPLICATION

OF TRIBAL CIVIL JURISDICTION OVER NONMEM-

BERS FOUND ON NONTRIBAL LAND IN RESERVA-

TIONS.

A. In Montana v. United States, 450 U.S. 544, 565

(1981), this Court determined that the “inherent sover-

eign powers of an Indian tribe do not extend to the

activities of nonmembers of the tribe.” The Court identi-

fied two exceptions to that general rule. First, a tribe may

retain inherent sovereign authority over non-Indians on

reservations “even on non-Indian fee lands,” and “may

regulate, through taxation, licensing or other means, the

activities of nonmembers who enter consensual relation-

ships with the tribe or its members, through commercial

dealing, contracts, leases, or other arrangements.” Id.

(emphasis supplied). In addition, the Court found that a

tribe may retain inherent sovereign power “over the con-

duct of non-Indians on fee lands within its reservation

when that conduct threatens or has some direct effect on

the political integrity, the economic security, or the health

or welfare of the tribe.” Id. at 566; see also South Dakota v.

Bourland, 508 U.S. 679, 695-696 (1993) (reaffirming Mon-

tana standards in the context of public lands on the

reservation, and remanding for a decision on whether

either of the “two exceptions” to that general principle

applied).

sialon

In Strate v. A-1 Contractors, 520 U.S. 438 (1997), the

Court dispelled all doubt as to the central position of the

Montana test. Strate identifies Montana as the “pathmark-

ing case concerning tribal civil authority over nonmem-

bers.” Id. at 445. Under Strate, the analysis in Montana

sets out a “main rule,” id. at 453, or a “general rule,” id. at

446, providing that, absent contrary congressional direc-

tion, “Indian tribes lack civil authority over the conduct

of nonmembers on non-Indian land within a reservation,

subject to two exceptions: The first exception relates to

nonmembers who enter consensual relationships with the

tribe or its members; the second concerns activity that

directly affects the tribe’s political integrity, economic

security, health, or welfare.” Id. This Court continued on

to emphasize the land-based nature of tribal jurisdiction:

“Regarding activity on non-Indian fee land within a res-

ervation, Montana delineated — in a main rule and excep-

tions — the bounds of the power tribes retain to exercise

‘forms of civil jurisdiction over nonmembers.’ ” Id. at 453.

One of the primary holdings in Strate — that a state

highway right-of-way should be treated as nontribal land

for the purpose of a Montana analysis - unambiguously

reflected the central nature of the land-status inquiry

with regard to the Montana analysis. Id. at 456 (“We

therefore align the right-of-way, for the purpose at hand,

with land alienated to non-Indians. Our decision in Mon-

tana, accordingly, governs this case”). Because Montana

was the “controlling decision,” Strate held that to “pre-

vail” the “petitioners must show that . . . tribal-court

action against nonmembers qualifies under one of Mon-

tana’s two exceptions” (id.), a burden they failed to carry.

See El Paso Nat. Gas Co. v. Neztsosie, 526 U.S. 473, 482 n.4

(1999) (distinguishing Strate because it “dealt with claims

against nonmembers arising on state highways, and

‘express[ed] no view on the governing law or proper

forum when an accident occurs on a tribal road within a

reservation’ ”).

B. That Montana set out a main rule - a presumption

against tribal jurisdiction over nonmember activity on fee

lands which can only be overcome by demonstrating the

existence of one of two limited exceptions —- warrants no

further discussion. The court of appeals, however, effec-

tively rejects the bright-line test of Montana and Strate,

finding unpersuasive the contention that, under Montana,

“fee status should become the determining factor in cases

involving the assertions of tribal sovereign power over

nonmembers on the reservation” (Pet. App. lla) and

opining that “[flee status is largely inconsequential in this

case” (id. at 20a n.11). To the court below, “the status of

the land involved as fee land or tribal land is simply one

of the factors a court should consider when determining

whether a tax on nonmember activity on the reservation

falls within the civil jurisdiction of the tribe.” Id. at

19a-20a. The court of appeals then departed from this

Court’s jurisprudence by adopting a refinement of the

district court’s “balancing test,” id. at 14a, that focuses on

two factors:

(1) the status and conduct of the nonmembers

and (2) the nature of the inherent sovereign

powers the tribe is attempting to exercise, its

interests, and the impact that the exercise of the

tribe’s powers has upon the nonmember inter-

ests involved. Any accounting of fee status

either falls into the Court’s study of these fac-

tors or becomes secondary.

———e rr

Id. at 25a. The mischief wrought by this new “balancing

test” is palpable.!

Aside from an abject failure to recognize and give

effect to the plain holdings in Montana and Strate, the

court of appeals has introduced into the sensitive area of

tribal civil adjudicatory and regulatory authority a stan-

dard that makes infeasible a reasoned assessment of such

authority’s scope by States, tribes and individual non-

members. Its “balancing test” thus subjects any deter-

mination with respect to the ability of a tribe to regulate

nonmember activity to a highly subjective analysis by the

federal courts. There can be no doubt that the injection of

these novel principles into federal Indian law will lead, in

1 To the extent the court of appeals relied upon Merrion v.

Jicarilla Apache Tribe, 455 U.S. 130 (1982), and Washington v.

Confederated Tribes of Colville Indian Reservation, 447 U.S. 134

(1980), that reliance was unjustified for the reasons discussed by

Petitioner; i.e., both cases involved the application of tribal

taxes to nonmembers who were doing business on tribal lands

with either a tribe or a tribal outlet. Pet. 13-14. Neither factor is

involved here. The court of appeals also devoted substantial

attention to Buster v. Wright, 135 F. 947 (8th Cir. 1905), appeal

dismissed, 203 U.S. 599 (1906). Buster, while involving

application of tax on trading within tribal territory against

nonmembers who conducted business on their own lands, was

decided against a unique statutory background and the

conclusion that an 1896 law providing for the sale of townsites

did not divest the tribe of its inherent authority with respect to

taxing business activities - a tax which existed prior to the law’s

passage. Montana and Strate, which represent this Court's

explication of inherent authority principles, establish that

where, as here, tribal “gatekeeping” power has been lost by

congressional or executive action, so too has tribal inherent

authority, absent the presence of a Montana exception.

the Tenth Circuit (and beyond if this case finds applica-

tion beyond that circuit), to new rounds of vexing, divi-

sive litigation.

C. The court of appeals compounded its error by

employing the “balancing test” to reconfigure the Mon-

tana consent exception. It accomplished this result by,

one, adopting a sweeping theory of implied consent and,

two, devising a “disproportionality” standard to deter-

mine whether the scope of this implied consent was

exceeded. The practical result of this analytical regime is

evisceration of the presumption against the existence of

tribal inherent authority over nonmembers with respect

to nontribal land activities.

1. The court of appeals held that a nonmember who

enters a reservation using federal or state highways and

stays at a nonmember-owned hotel located on nonmem-

ber fee land impliedly consents to tribal jurisdiction with

respect to that transaction. The court predicated its hold-

ing on factual findings by the Navajo Tax Commission

concerning “the extent of police, fire, emergency medical,

and tourist services provided by the tribe to benefit [Peti-

tioner] and its guests at the Trading Post.” Pet. App. 27a.

Since virtually all tribes will be positioned to argue that

they contribute, either directly or indirectly, to “the privi-

leges of living in an organized society” (Carmichael v.

Southern Coal & Coke Co., 301 U.S. 495, 522 (1937)), the

court of appeals’ reasoning compels the conclusion that

consent to tribal regulation of any kind must be implied

merely by entering a reservation.

The court of appeals’ analysis cannot be squared with

Montana or Strate. In the former case, this Court reiterated

the parameters of the consensual relationship as covering

the “activities of nonmembers who enter consensual rela-

tionship with the tribe or its members, through commer-

cial dealing, contracts, leases, or other arrangements.”

Montana, 450 U.S. at 565. It is clear that the nonmembers

in this case have not entered into commercial dealing,

contracts, or leases with the “tribe or its members.” The

court below found in effect that the term “other arrange-

ments” included the act of driving on a nontribal road to

a nonmember hotel on nonmember land within the reser-

vation. However, those acts are, as Strate observed in an

entirely comparable context, “ ‘distinctly non-tribal in

nature.’ ” 520 U.S. at 457. To credit the Tenth Circuit's

theory is to overrule Strate sub silentio.?

2. The court of appeals, in its final embellishment of

the Montana test, held that once consent had been estab-

lished, a regulation in the form of a tax can be imposed,

provided the regulation is “not disproportionate to the

benefits” received. Pet. App. 32a. It premised this conclu-

sion on the amount of the tax - 8 percent — which the

district court had found within the range of similar taxes

2 Indeed, this Court rejected a previous attempt to use

implied consent to establish tribal jurisdiction. In Oliphant v.

Suquamish Indian Tribe, 435 U.S. 191, 193 n.2 (1978), the Court

noted that there were signs at the entrances to the reservation

advising that entry onto the reservation “would be deemed

implied consent to the criminal jurisdiction of the Suquamish

tribal court.” Although the Court did not address the signs’

significance in the opinion, it is plain that consent to tribal

jurisdiction cannot be implied on the basis of conduct that, in

itself, does not fall within the scope of the commercial or other

contract-based activity referred to in Montana's description of

the first exception.

10

imposed by States or their political subdivisions — and the

fact that the tax “is used in ways that appropriately

benefit the taxpayers.” Id. It is difficult to discern mean-

ingful limits on a tribe’s authority under this sort of

reasoning, since it will be the very unusual tax or other

regulation that cannot be said to benefit the nonmember

in some fashion. The implied consent rationale thus could

be used by a tribe to impose a speed limit on a nonmem-

ber using a state road through the reservation on the

ground that tribal services in connection with such regu-

lation “appropriately benefit” the drivers by reducing

excessive motor vehicle speeds and increasing highway

safety. In sum, the first “exception” swallows the “main

rule” under the Tenth Circuit’s approach which effec-

tively replaces the presumption against tribal jurisdiction

with a rule that presumes the existence of inherent

authority absent a disproportionality finding.

II

THE DECISION BELOW HAS THE POTENTIAL TO

SERIOUSLY DISRUPT APPLICATION OF MONTANA

PRINCIPLES OUTSIDE THE TAXATION CONTEXT.

Although the litigation at issue involves a tribal tax,

the principles at stake extend far beyond that issue. The

logic of the court of appeals’ decision, as indicated by the

motor vehicle speed regulation hypothesized above,

applies to any exercise of civil regulatory authority over

nonmembers with respect to activities on their own prop-

erty or other lands as to which a tribe has lost gatekeep-

ing power. A salient, and actual, example of the

disruption in Indian law promised by the decision below

11

emerges from the recently decided Bugenig v. Hoopa Valley

Tribe, No. 99-15654, 2000 U.S. App. LEXIS 24746 (9th Cir.

Oct. 3, 2000).

In Bugenig, the tribe attempted to impose a land use

restriction on a small plot of nonmember-owned land. To

determine whether the tribe could exercise jurisdiction,

the court invoked the “general proposition” of Montana

and the “two narrow exceptions.” 2000 U.S. LEXIS 24746,

at *23. As to the consent exception, the court noted that

the tribal court below had concluded that the “first excep-

tion was inapplicable in light of the absence of any signif-

icant consensual relationship between Bugenig and the

Tribe.” Id. at *24 n.6. The court of appeals also found that

the second exception had not been proven. Under the

Tenth Circuit’s decision, however, the result would have

been the opposite. The nonmember would have been

deemed to have consented impliedly to tribal authority

merely by residing on the reservation. The question then

would have become whether the land-use regulation was

“disproportionate,” and little doubt exists that the court

below would have answered that question negatively

since governmental entities engage in myriad types of

such regulation and since the regulation by the Hoopa

Valley Tribe was restricted to a prohibition against log-

ging and not other uses of the property.

It bears emphasis that the effect of the decision below

cannot be minimized because its anomalous rule would

be applied only in the Tenth Circuit. That circuit has a

large share of Indian country which has generated a

significant amount of Indian law litigation both recently

and over the years. See, e.g., Oklahoma Tax Comm'n v.

Chickasaw Nation, 515 U.S. 450 (1995); Hagen v. Utah, 510

12

U.S. 399 (1994); Lincoln v. Vigil, 508 U.S. 182 (1993); Okla-

homa Tax Comm’n v. Sac and Fox Nation, 508 U.S. 114

(1993); Negonsott v. Samuels, 507 U.S. 99 (1993); Oklahoma

Tax Comm'n v. Citizen Band Potawatomi Indian Tribe, 498

U.S. 505 (1991); Cotton Petroleum Corp. v. New Mexico, 490

U.S. 163 (1989).

Ill

CERTIORARI SHOULD BE GRANTED TO RESOLVE

THE DIRECT CONFLICT WITH THE NINTH CIRCUIT.

The Ninth Circuit decision in Big Horn Electric Cooper-

ative v. Adams, 219 F.3d 944 (9th Cir. 2000), stands in

irreconcilable conflict with the decision below, as the

Petitioner argues. Pet. 18-25. Two points nonetheless

merit brief iteration.

First, in Big Horn the court squarely rejected the

notion that either Washington v. Confederated Tribes of Col-

ville Indian Reservation, 447 U.S. 134 (1980) or Merrion v.

Jicarilla Apache Tribe, 455 U.S. 130 (1982) “abrogates Mon-

tana’s main rule.” 219 F.3d at 952. The Ninth Circuit

found instead that “Merrion actually lends support to

Montana’s application in this case” insofar as Merrion

indicates that a tax on non-Indian fee land would be an

impermissible extension of tribal jurisdiction. Id. Like-

wise, the Ninth Circuit deemed Colville to be consistent

with Montana in that Colville “dicta appears to support

Montana’s conclusion that tribal taxation power over

property located on non-Indian fee land is extremely

narrow.” Id. Second, Big Horn straightforwardly followed

the Montana test, initially concluding that the “main rule”

applied because the tribe had lost gatekeeping power

13

over the rights-of-way and then determining that neither

exception had been proved by the tribal authority propo-

nents. Id. at 950-952. The Ninth Circuit's faithful adher-

ence to this Court’s Montana jurisprudence contrasts with

the opinion below and creates a conflict among the cir-

cuits warranting certiorari review.

¢

CONCLUSION

For the foregoing reasons the Amici States respect-

fully request that this Court grant the Petition for Writ of

Certiorari.

Respectfully submitted,

Mark W. BARNETT

Attorney General

State of South Dakota

JoHN Patrick GUHIN

Deputy Attorney General

500 East Capitol Avenue

Pierre, South Dakota 57501-5070

Telephone: (605) 773-3215 |

Counsel of Record